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AT&T’s DirecTV Now Plan Isn’t Highly Rated by FCC

11/14/2016 8:00 AM Eastern
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The FCC’s Wireless Bureau has told AT&T that its particular combination of data and streaming plans may be anticompetitive.

WASHINGTON — The Federal Communications Commission has promised to look at zero-rating and usage-based data plans on a case-by-case basis under its Open Internet general conduct standard.

 

The agency’s Wireless Bureau, though, has made a case for why AT&T’s plans might be anticompetitive conduct that violates new netneutrality rules. The FCC effectively fired a warning shot at AT&T’s free data service for mobile customers, saying the combination of DirecTV Now and AT&T Mobility sponsored data plans “appears to present significant anticompetitive effects.”

 

That came on the same day Donald Trump was elected president, signaling a likely far more deregulatory FCC: Trump has come out publicly against the net-neutrality rules and reclassification of Internet service providers as common carriers.

 

But this is still an Obama FCC, one that will need to move quickly on a Democratic regulatory agenda.

 

Jon Wilkins, chief of the Wireless Bureau, wrote AT&T senior executive vice president of external and legislative affairs Bob Quinn to say the bureau thinks AT&T’s sponsored data mobile broadband plan combined with zerorating DirecTV video apps for AT&T Mobility customers “may” obstruct competition.

 

Wilkins “invited” AT&T to explain why the bureau was not right to be concerned.

 

AT&T immediately responded that its plans were pro-competitive, making it easier for customers to cut the cord to their cable plans.

 

FCC rules prevent unequal treatment of access to Internet content, but AT&T pointed out that any other content provider could offer sponsored content in the same “free data” model.

 

“The agency’s letter acknowledges that AT&T offers the same payment terms to all companies that want to take advantage of free data services,” blogged Fred Campbell of TechKnowledge after the letter became public. “AT&T doesn’t treat DirecTV any differently than it treats Netflix, Hulu or any other video streaming provider.”

 

The FCC has been vetting usage- based pricing and zero rating under its Open Internet general conduct standard. But with an incoming Republican administration, FCC chairman Tom Wheeler will have to hit the accelerator on any planned actions.

 

Wilkins’s letter cites AT&T’s Sept. 7 announcement of the “Data Free TV” DirecTV app, which allows mobility subs that also get DirecTV to stream that content on a zero-rated basis (that use doesn’t count against data allowances), and the upcoming DirecTV Now, which would zero-rate DirecTV for AT&T Mobility customers even if they don’t subscribe to DirecTV satellite service.

 

Wilkins said zero rating, in general, is not what troubles the bureau; the FCC has said zero rating might be pro-consumer and pro-competition. Rather, the “specific impact” of AT&T’s zero-rating practice on competition and its specific terms was bothersome.

 

“[It] is not difficult to calculate usage scenarios in which an unaffiliated provider’s sponsored data charges alone could render infeasible any third-party competitor’s attempt to compete with the $35 per month retail price that AT&T has announced for DirecTV Now,” Wilkins said. “Unaffiliated video providers not purchasing sponsored data would likewise face a significant competitive disadvantage in trying to serve AT&T Mobility’s customer base without zero rating.”

 

“AT&T and other broadband providers offer a service that lets consumers watch video without incurring any data charges,” Quinn said in an emailed statement. “These are incredibly popular services that we hope regulators won’t take away from the millions of people who enjoy them today.”

 

Sen. Brian Schatz (D-Hawaii), ranking member of the Communications Subcommittee, told Multichannel News: “I support the FCC’s approach to reviewing each of these zero-rating practices on a case-by-case basis because in many instances they provide benefits to consumers. The expert agency is best positioned to examine these practices to determine if they empower consumers or jeopardize a free and open Internet for all.”

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